Comments on: User Growth Vs Revenue (Why “Free Only” May Limit Growth)

By: Twitted by mariagrineva

Twitted by mariagrineva — Wed, 02 Dec 2009 13:43:59 +0000

[...] This post was Twitted by mariagrineva [...]

By: Sean

Sean — Tue, 12 May 2009 17:44:20 +0000

NC – sorry it took me so long to approve your comment. I just noticed that it was lost in a bunch of comment spam. Very good point on free users often being more work than paid users…

By: Sean

Sean — Mon, 13 Apr 2009 22:42:59 +0000

@Evan – Good questions. The survey was targeted only to users that registerd but didn’t download and asked why they changed their minds. A majority said that they didn’t believe that it was really free. Once we showed them that we also had a paid version, the download rate improved considerably.

By: NC

NC — Fri, 10 Apr 2009 20:20:11 +0000

So refreshing to read this, Sean. Our beta customers, who are paying nothing for the first year, have been some of the most, ahem, time consuming to work with and have taken the longest to implement our product into their organizations. Those who are paying are jumping right in, asking less questions and are just excited to get going. They’re also the happiest with us verbally and online.

As we roll out products for new industries, we know that beta customers can be great, but we’ve decided that they have to meet two criteria:

1) Do they look good on our customer list?
2) Will they be responsive and helpful to us in the development of the product?

Luckily, in most cases, our current betas fit that criteria, but the experience has made it a lot easier to say “sorry, we don’t” when we get asked about trial periods. The perceived value is so much higher on a product people have to pay for.

By: Greg H

Greg H — Fri, 10 Apr 2009 05:14:38 +0000

Sean,

Interesting insights, especially the notion of “framing” the free option in relation to the paid one. A related point I would make is that making a paid offering part of your initial business plan projects confidence. Tacking on a premium later comes across as desperate (probably because it often is).

As an example, I’m increasingly coming around to the view that Twitter is a revolutionary communications platform that will have far reaching implications on many businesses. But does that mean the founders can successfully roll out an ROI-positive revenue model? I’ll believe it when I see it.

By: Evan

Evan — Fri, 10 Apr 2009 00:55:41 +0000

I have a curiosity question about #1. When you surveyed those users that were dropping out of the acquisition process, did they actually say tell you that their concern was related to the lack of apparent money making strategy? Or was that something you figured out through piecing together answers?

This obviously isn’t directly relevant to the idea that a business model that isn’t “free” can actually drive growth–which is an extremely interesting one–but it brought up an aspect of the survey process that I’ve wondered about.

By: Bill Allred

Bill Allred — Wed, 08 Apr 2009 02:57:27 +0000

Sean,

One more reason, related to #3, is that charging money ensures that you’re building the right product. Behavioral economics has shown that users’ behavior changes when money is involved, even if the difference is as small as going from free to $0.01. By charging early your customer development process is often more likely to yield the right feature set for the right customer demographic.